The Moscow Times
February 13, 1999

Eastern Pride and Western Prejudice

Jean MacKenzie

The Cold War divided Europe into what, for lack of a better concept, we called "communist" and "free." The decades of government propaganda and cultural isolation led to fear, suspicion and the development of potent stereotypes on both sides of the Iron Curtain. With the revolutions of 1989 in Eastern Europe and the collapse of the Soviet Union in 1991, the physical barriers dissolved almost overnight. But as Janine Wedel shows in her excellent study of cross-cultural miscommunication, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe 1989-1998, the psychological divisions proved far more resistant to change.

The West, particularly the United States, was quick to take credit for communism's demise. It was Western resolve, the now dimly remembered Strategic Defense Initiative ("Star Wars"), or the Beatles and blue jeans that had eaten away at the Soviet monolith.

With victory came responsibility: It was incumbent upon the West to extend the benefits of democracy and capitalism to the countries of the East. As Wedel puts it, "The fall of the Berlin Wall energized American efforts to remake Central and Eastern Europe in 'our' image." What followed was a virtual army of advisers, technicians, bureaucrats and businessmen, few of whom had any real appreciation or knowledge of the countries they were trying to help, pouring in billions of dollars in aid money that all too often found its way back into the pockets of the donor nation.

The West seemed to operate on two flawed and mutually exclusive assumptions in dealing with their Eastern partners. Those who had lived under communist rule for four decades were thought to be people just like us, who had chafed under a bad regime. Given the chance, and a bit of a push, they would understand that their future now lay with the West, the cultural advantages of a free society, the material well-being of a market economy.

Coexisting with this was the idea that the citizens of Eastern Europe had been infantilized by the all-encompassing totalitarianism of communism, and could no longer be relied on to think for themselves. They must be guided, led by the hand, and taught to walk before they could run.

Conspicuously absent from both of these modes of thinking was respect for the cultural and social traditions of Eastern Europe and understanding of the historical legacy and of the very real achievements.

The East also had its cultural schizophrenia. The West was seen through an ideological prism that split it into angel or demon. To the extent that citizens were disaffected with their communist governments and the shoddy lifestyle they provided, they tended to see the West as the repository of everything good - political and cultural freedom, money, consumer goods.

But subjected to Westerners' patronizing attitudes, the Easterners' wounded pride and envy converted to resentment, and a condemnation of the materialism and emptiness of capitalist society.

How, then, could the two sides get together? Very badly, as Wedel points out. She traces the development of the aid effort through three stages, which she calls Triumphalism, Disillusionment and Adjustment.

The first stage is characterized by inflated expectations and wild optimism on both sides. The West thinks all it had to do was show up with the cash, and Eastern Europe would reintegrate itself into the West. For their part, the countries of Eastern Europe expect an unending rain of dollars and unlimited goodwill.

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What followed was a river of misunderstanding and bad faith, swirling around a few islands where, against all the odds, something actually worked. This disillusionment stage set relations back a good deal, and Wedel is not shy about assigning some of the blame for a return of communist and socialist regimes in Eastern Europe to badly bungled aid efforts.

The chapter on Russia deals primarily with the ill-started Harvard Institute for International Development, a private entity that was handed the reins of the United States aid effort to Russia, along with over $ 57 million in USAID funds ($ 17.4 million was revoked when HIID's contract with the U.S. government was abruptly terminated in 1997, in the wake of a corruption scandal).

The Harvard Project, as it was called, followed the template of many aid programs to Eastern Europe: Donors locked onto a small clique of young, Western-oriented, English-speaking intellectuals, and focused all their efforts on them. In Russia, it was the St. Petersburg clan of Anatoly Chubais, and Wedel traces the synergy and symbiosis between Chubais and HIID's Jeffrey Sachs through the five years of their partnership (1992 until 1997).

It is not clear who got the best of the deal - Chubais undoubtedly benefited from his role as conduit of Western aid, and Sachs derived additional prestige in the West as the man who remade Russia.

Wedel devotes significant space to debunking the Sachs myth. According to her sources, he was a fairly insignificant figure from the Russians' perspective; as long as he kept the money coming, they felt comfortable ignoring his advice. She quotes Alexander Bevz, head of the Gaidar Institute, as saying "Sachs was never an adviser to the government, that's his own illusion." The Harvard Project poured funds into Russia's privatization program, what later became known as prikhvatizatsiya, or, as Wedel translates it, "grabitization." It was a free-for-all in which a few insiders (most of them Chubais cronies) picked up jewels of state industry at fire-sale prices. One need only think of Vladimir Potanin, the "baby billionaire," who managed to acquire Norilsk Nickel for a fraction of its worth, and then bail it out of debt with credits he arranged as the finance minister.

The adjustment phase is one in which both sides, older and wiser, grope their way to a more realistic modus vivendi. This seems to be happening with more success in Central Europe, especially Poland, Hungary and the Czech Republic, than in the nations of the former Soviet Union, where corruption and political turmoil has all but derailed the reform process. The very recent flap over agricultural aid to Russia, with mutual accusations of greed and incompetence, shows just how little progress has been made.

Wedel's book should become obligatory reading for anyone contemplating business in Central and Eastern Europe. It is well-documented and exhaustively footnoted. But this virtue is also the work's major shortcoming. The author's academic style may deter some readers, keeping the book from the wider audience it deserves.

Of special delight are the cartoons by Chris Suddick, which often illustrate more in a page than a whole chapter of text. My favorite shows a cocktail party at which suave Western businessmen are sipping champagne and mouthing platitudes about aid to emerging communist countries. "It's like turning fish soup back into an aquarium!" or "You can't cross a chasm in two jumps!" Meanwhile a couple of down-at-heel Easterners are huddled in a corner, saying "Do you think they'll give us Xerox machines?"

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